Avoiding care fees is a topical subject that has been covered rather extensively in the press recently, for example in this recent Daily Mail article.

Can you Avoid Care Fees?

The debate centers upon the assumption that placing a property into trust cannot protect someone’s home from being assessed if they enter care. As with any newspaper story, not all of the supporting detail or analysis is contained within the article. A property, or part of it, can be placed into trust. The issue is the timing of when the property is placed into trust.

One option is to establish the trusts in lifetime but the half share of the property enters the trust on the first death. This leaves the survivor only owning a half share of the property when the survivor enters care.

Under section 7.019 of the ‘Charging for Residential Accommodation Guide’ (CRAG Regulations), this half share of the property has no real value hence the whole of the property is protected for the purposes of care. The survivor entering care has made no gifts meaning that this strategy does not breach the rules of deprivation. There are no case law studies which demonstrate when the council has been able to attack and win against this strategy.

The second method of settling a property into trust is for the couple, or the single person, to settle all or part of the property into trust while they are alive. Many companies are selling this solution at present and it is often referred to as ‘the asset protection plan’. In this instance, this strategy is classed as deprivation for somone entering care has given all or part of their property away. The issues to be considered in this instance are why the gift was made and in particular, the time between the making of the gift and them entering care. Most opinion would suggest that the gift of the whole or part of the property into trust needs to be completed at least 5 years before they enter care.

Returning to the articles regarding the settling of a home into trust, the articles are referring to settling during lifetime (the second strategy). If this is the case then, this might not work. However, if the half share of the property was settled into trust on death and the survivor enters care (pursuant to the first strategy) then we would disagree with the comments contained in the article as this strategy has been proven to work and will probably continue to do so.

Once again, to reiterate, the answer is in the detail and very often these articles make sweeping statements without specifying the all important detail.

N.B. this article does not constitute personal advice and is for information purposes only. We recommend you seek professional legal advice regarding care fees, tax and probate.

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